Monday, August 20, 2012

21st Century Global Brands - Made in China

Schumpeter articles in the The Economist are a delight to read. The latest one sums up an interesting generality about manufacturers and their approach to branding products and companies:

"... managing a portfolio of brands is complicated and demanding: people who made their fortunes manufacturing things may not be suited to the airy-fairy world of brand management."

Schumpeter writes:

"Americans can stop worrying about China’s plans to take over their country. The worst has already happened: on July 25th Lenovo, a Chinese computer firm, announced a deal to sponsor the National Football League. America will continue to provide muscle-bound linebackers, but the Chinese will provide the clever laptops and desktops that make their tussles possible."

Thus begins the article "Brand New" in The Economist here. The story of Lenovo is a case study in what else is there to emerge from the world's most populated country. Yet, it seems that the leap from becoming a global brand is not an easy one.

"Only four emerging-market brands make Interbrand’s list of the world’s 100 most valuable: Samsung and Hyundai of South Korea, Mexico’s Corona beer and Taiwan’s HTC."

The article discusses the book "The New Emerging-Market Multinationals" by Amitava Chattopadhyay, of INSEAD, and Rajeev Batra, of the University of Michigan’s Ross School of Business. Beyond the two common best practices for global growth, economies of scale and local knowledge, the article highlights, per the book, three more ingredients required for the emerging-market player to go global.

"The first is focus: they should define a market segment in which they have a chance of becoming world-class. ... Lenovo focused on computers for corporate clients before expanding into the consumer market."

"The second ingredient is innovation: firms need new products and processes that generate buzz. HTC produces 15-20 new mobile-phone handsets a year. Natura releases a new product every three working days."

And finally, I believe, the most important one:

"The third ingredient is old-fashioned brand-building. Emerging-market bosses must grapple with many traditional branding puzzles. Should they slap the company’s name on the product (as Toyota does) or another name (as Procter & Gamble does with its stable of brands, from Gillette razors to Pampers nappies)? How can they market themselves effectively in multiple countries without busting the budget?"

Innovation for the sake of innovation leads nowhere, perhaps a nice collection of artifacts. Marketing the power of the innovation is essential to build the dream that the customer or consumer must aspire to, hence, forming a symbiotic relationship between the growth of the name to becoming a brand name to being a global brand.